Emory Bankruptcy Developments Journal

Volume 32Issue 1

Comments

State Contract Impairment Clauses and the Validity of Chapter 9 Authorization

Bradley Hull | 32 Emory Bankr. Dev. J. 87 (2015)

Chapter 9 requires states to authorize any municipal bankruptcy filing. However, most state constitutions have a provision similar to the Contract Clause of the U.S. Constitution that prohibits passing any “laws impairing the obligations of contracts.” The U.S. Supreme Court has foreclosed the argument that Chapter 9 bankruptcy violates the federal constitution. State courts have generally followed the Court’s jurisprudence in interpreting the contract clauses of their own constitution. The Court’s jurisprudence, however, is inconsistent with the text, purpose, and origin of the Contract Clause. This Comment argues that state courts should abandon this jurisprudence and adopt a much stricter interpretation of their own clause that is more in line with the Court’s earlier decisions. Under this stricter interpretation, states violate their constitutions’ contract impairment clauses by authorizing chapter 9 bankruptcy filings, except in the unlikely case that a municipality has no contractual obligations to impair.

Bitcoin and Bankruptcy: Putting the Bits Together

Chelsea Deppert | 32 Emory Bankr. Dev. J. 123 (2015)

The classification and treatment of virtual currency, like bitcoin, under the Bankruptcy Code is unsettled. Because the Code affords greater protections to currencies than to commodities, bitcoin’s classification has far-reaching implications in the context of bankruptcy; however, no bankruptcy court has yet affirmatively ruled on bitcoin’s treatment. This Comment first explores what bitcoins are and the respective arguments for each classification in the currency versus commodity debate. Then, this Comment examines the current legal treatment of bitcoin and bitcoin-specific issues in bankruptcy. Finally, this Comment argues that bitcoin must be affirmatively classified and proposes a licensing solution to bitcoin’s classification; and then explores the effects this solution would have in bankruptcy.

An Unworkable Result: Examining the Application of the Unfinished Business Doctrine to Law Firm Bankruptcies

John W. Edson | 32 Emory Bankr. Dev. J. 159 (2015)

While unfinished business claims have played a role in nearly every major law firm bankruptcy in the past ten years, the law remains unsettled. As major law firm bankruptcies become more prevalent, scholarly debate has centered on whether pending hourly fee arrangements should be included in a law firm’s bankruptcy estate. This Comment will advocate for the abolishment of unfinished business claims in the bankruptcy setting because these claims yield unworkable results under Sections 541, 363, and 362 of the Bankruptcy Code. Alternatively, this Comment will argue that including unfinished business in a law firm’s bankruptcy estate violates public policy by interfering with a client’s right to counsel. Finally, this Comment will provide practical guidance for firms wishing to contract around unfinished business claims.

Let’s Talk About Guns: Should the Code Give Gun Owners Protection?

Armstead Lewis | 32 Emory Bankr. Dev. J. 197 (2015)

Although, the topic of firearms is often controversial and political, gun owners in the U.S. predominantly own firearms in a way that arguably allow firearms to be classified as “household goods” in Section 522(f)(1)(b) and be included in the list of items that fit within the term of “household goods” in Section 522(f)(4)(A) of the Bankruptcy Code. The recent proposals of the Protecting Gun Owners in Bankruptcy Acts of 2010, 2011, 2014, and 2015 make this a timely issue that should be addressed. The proposals of the Protecting Gun Owners in Bankruptcy Acts have requested that firearms be classified as “household goods” in Section 522(f)(4)(A). This Comment addresses why firearms have not been addressed in the Bankruptcy Code, discusses the proposed Protecting Gun Owners in Bankruptcy Acts, and examines if firearms should be listed within the term of “household goods” in Section 522(f)(4)(A) of the Code.

The Non-Dischargeability of Private Student Loans: A Looming Financial Crisis?

Preston Mueller | 32 Emory Bankr. Dev. J. 229 (2015)

Unlike the vast majority of consumer debts owed to private lenders, educational loans made by private lending institutions are protected as non-dischargeable under Section 523(a)(8) of the Bankruptcy Code. Because most borrowers cannot shirk their obligations to private student lenders, even by filing for bankruptcy, lenders are willing to lend more in this context than with other dischargeable forms of debt; thus artificially inflating the market for higher education loans. This practice is becoming crucial to the health of our overall economy as student loans have become one of the largest forms of consumer debt in the United States, second only to mortgages. This Comment examines why private student lenders should not be afforded special protection under Section 523(a)(8), and then suggests that removing this protection and thus allowing the discharge of private student loans can help to deflate the growing higher education bubble.